May 29 (Reuters) - An activist investor trying to win
control of Cliffs Natural Resources Inc's board said on
Thursday it may take the mining company to court over a "proxy
put" that could trigger a liquidity crisis.

In a regulatory filing last week, Cliffs said it may be
forced to repurchase its outstanding senior notes because of a
change of control provision on the notes if all six of hedge
fund Casablanca Capital's nominees were elected to its board.

Casablanca, which wants to replace Cliffs' chief executive
and separate the company's U.S. assets from its international
properties, said on Thursday that Cliffs could defuse the
problem by approving its nominees "not as an endorsement, but
merely for the narrow purpose of not triggering the proxy put."

"Instead of implementing this now-common corporate
governance measure, the board has implied a willingness to put
the company's very existence at risk, employing brinkmanship
with the company's liquidity in an attempt to preserve its
current seats," Casablanca said in a statement.

Cliffs said in a statement late on Thursday that its board
"will consider" whether to approve Casablanca's nominees.

Defending itself against Casablanca's accusations, Cliffs
said the change of control provision was standard for most
companies with publicly issued debt, had been previously
disclosed and had to be disclosed now due to U.S. Securities and
Exchange Commission rules regarding change of control.

"With regard to Casablanca's 'proxy put' accusation, in no
way is Cliffs threatening its shareholders," Cliffs said.

Casablanca said it would "protect shareholder interests by
all available means, including litigation" if Cliffs did not
approve its nominees.
Continued...